Is the games industry broken by design?

Over the last two or three years we’ve frequently heard reports surfacing that games developer A has laid off X number of employees or Publisher Y is cutting back and closing down studio Z. The common cause of this? Simple: money.

Now before you tell me ‘it’s an effect of hard economic times’, I’m going to tell you straight off, it isn’t. Yes times have been tough, gamers and consumers in a more general sense have been tightening the proverbial belt but there’s more to it that. Hell, its not like people are not buying games. GTA V generated over 800 million dollars in revenue in its first twenty four hours, so don’t tell me the money isn’t out there and that people aren’t buying games.

The Internal Disease

This illness doesn’t come from lack of consumer buying power, it doesn’t come from any worldly financial crisis, it comes from the people in charge of that company.

I’m convinced, nay, certain that games companies suffer from a more internal disease. This illness doesn’t come from lack of consumer buying power, it doesn’t come from any worldly financial crisis, it comes from the people in charge of that company.

Some people say games are an art, or at least science mixed with art and to be honest, if you think that your not completely wrong but, your not right either. Video games are a trinity, (a tri-force if you’ll excuse the pun). In one hand you have the art of video games, its beauty personified in art, sound and story telling. Next the science, the genius intellects that code and program everything you see. The last you ask? The last is something many forget, the last edge of the triangle to make it complete: business.

It’s all about the money

Now I’m not talking about the business of selling games, I’m talking about the business of making games. The fact is games cost money to make and there are an array of cost’s to factor in before starting any development. Let’s just run over a basic few, you have:

• Wages of the developers
• Running costs like lighting, power, equipment, food and water
• Then you have your development costs which include things like software, licenses…

The list goes on.

Business skills are transferable and are essential to games development, it is something sadly lacking in today’s industry. I’m not talking about the kind of ‘let’s come up with a good micro-transaction store’ kind of skill, I’m talking about project management, budget management, leadership, preparation, these are real business skills.

…as soon as you start looking to the customer to pick up your overspend, you’re in trouble.

One of the biggest reasons games get pushed back and back again from their original release date is usually down to two things, poor project management and going over-budget. I have worked in business for many years and can safely say that as soon as you start looking to the customer to pick up your overspend, you’re in trouble.

Speaking in terms of smaller studios and indie developers, there’s a frequent trend in why so many go under. Yes, these talented people know how to make games, but they don’t know how to make good business. This is why companies in other industries spend small fortunes to hire talented project managers and leaders, because their role is just as important as the people who make the product.

Even bigger companies like the now defunct THQ suffered huge financial issues largely down to poor business practices which eventually (and sadly) led to their downfall. Games developers need to learn to stick to their budgets carefully, Ren Mulford Jr. once said that “It takes more than capital to swing business” and it’s so true.

How many times have we seen big budget games costs go higher and higher, eventually to the point that when the game does come out, it is no longer a viable profitable venture?

Time’s are changing

Only now that the games industries bubble has burst and money isn’t floating around by the boat load any more are companies starting to realize how much money they pour down the drain every day. It’s true what they say ‘A good business man can make money in art but an artist can’t make money in business.’

Smaller companies especially need to wake up to the business side of things, yes have a creative dream, but realize that dream will never become a reality for you unless you put hard work into your business side. If you don’t, you’ll either never finish it or when you do, you’ll be so far in debt you’ll wish you hadn’t.

It’s time for the industry as a whole to start fixing its internal business issues

Stop making short term decisions for a quick buck and start thinking long term. Project manage effectively, budget realistically, cut down on your costs and plan smart. As the saying goes, look after the pennies and the pounds will look after themselves.

View the video version here – http://youtu.be/BK4YuKxcEdc